Revised Draft National Civil Aviation Policy

Minister of Civil Aviation P. Ashok Gajapathi Raju released the Revised Draft National Civil Aviation Policy (NCAP 2015) in New Delhi. The vision is to create an eco-system to enable 30 crore domestic ticketing by 2022 and 50 crore by 2027.

Enhance regional connectivity through fiscal support and infrastructure development and ease of doing business by simplification of procedures and e-governonance. Safety violations will be treated with zero-tolerance.

Directorate General of Civil Aviation (DGCA) will strive to create a single-window system for all aviation related transactions, queries and complaints. The services rendered by DGCA will be fully automated by April 1, 2016. DGCA will carry out a comprehensive review of all civil aviation requirements (CAR) once every 5 years starting from FY 2016-17

DGCA will be authorised to impose fines and penalties depending upon the nature of violations. For this, appropriate amendments, wherever required, will be carried out in Acts, Rules and Regulations. DGCA will be allowed to recruit its personnel directly for posts which are sanctioned as per recruitment rules by exempting them from UPSC for this purpose.

Ministry of Civil Aviation will target an all-inclusive airfare not exceeding Rs.2,500 per passenger, indexed to inflation for a one-hour flight on regional connectivity scheme by: (i) revival of un-served or under-served aerodromes and airstrips. (ii) Concessions by different stakeholders: (iii) viability gap funding (VGF) for scheduled commuter airlines (iv) cost-effective security solutions.

Revival of air strips, depending on demand, as no-frills airports will be done at a cost not exceeding Rs.50 crore, mostly through AAI. Requirement of 12 percent project Internal Rate of Return (IRR) will be relaxed for revival of these airports, wherever the airport is under AAI control.

Regional Connectivity Scheme will be made operational only in those States which reduce VAT on ATF at these airports to 1 percent or less and states to provide free land and multi-modal hinterland connectivity (road, rail, metro, waterways, etc) as required. To fly abroad government invites discussion on the proposal that airlines to acquire 300 Domestic Flying Credits (DFC) per annum instead of existing five years of flying and a fleet strength of 20 aircrafts.

The government plans to liberalize the regime of bilateral rights leading to greater ease of doing business and wider choice to passengers. The government will enter into an ‘Open sky’ Air Service Agreement on a reciprocal basis with SAARC countries. Increase in FDI in airlines from 49 percent to above 50 percent will be examined if the government decides to go in for open skies for countries lying within 5,000 km radius.

International codeshare between Indian and foreign carriers will be completely liberalized, subject to the air service agreement (ASA) between India and the relevant country. To encourage maintenance, repairs and overhaul (MRO) sector in India government proposes to: a) Service Tax on output services of MRO will be zero-rated (b) Aircraft maintenance tools and tool-kits will be exempt from customs duty (c) Foreign MRO experts will be provided visas promptly, especially in cases of an Aircraft on Ground (AOG) situation.

MRO, ground handling, cargo and aviation turbine fuel (ATF) infrastructure colocated at an airport will also get the benefit of ‘infrastructure’ sector, with benefits under Section 80-IA of Income Tax Act. Separate regulations for helicopters by April 1, 2016. The government will promote the growth of scheduled commuter airline (SCA) for efficient regional connectivity.

The eligibility criteria for SCA in terms of paid-up capital will be kept at Rs.2 crore to facilitate easy entry of new players. The future airport projects in India, both greenfield and brownfield have cost efficient functionality. Operators of future airport projects will not levy airport charges, concession fee and royalties etc on MRO, cargo, ground handling, ATF infrastructure other than a reasonable lease rental.

Tariff at all future airports will be calculated on a ‘hybrid till’ basis.30% of non-aeronautical revenue will be used to cross-subsidise aeronautical charges. Ministry of Civil Aviation and Ministry of Defence to ensure commercial aero-manufacturing is covered under defence off-set requirements. Government would negotiate with global OEMs to set up an aircraft assembly plant in India. Ground handling, catering and aircraft fuelling proposed to be included under Essential Services Maintenance Act.